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A franchise can jumpstart your practice—but it comes with tradeoffs. Here’s what to know before you sign the contract.
Franchising can feel like a safer path to healthcare practice ownership. For many mental health professionals, that’s the appeal. These models give you access to support with branding, advertising, credentialing, and other tasks you might not want to handle alone.
But before you sign a franchise agreement and hang your shingle, it’s worth asking: how much control will you really have? What risks are involved? And will this be your practice, or someone else’s?
Here’s what to consider if you’re exploring a mental health franchise.
Understand What the Franchise Agreement Covers—And What It Doesn’t
Franchise ownership starts with a franchise agreement. This contract allows you to operate under an established brand for a fee. It often includes resources like marketing support and operational guidance.
But it’s not a shortcut to a full-service setup. A franchise agreement typically won’t guarantee patient volume or staffing. While joining a franchise may help with coordination and visibility, you’ll still need to recruit your own providers and attract clients independently.
It also usually doesn’t cover key legal steps like forming your business entity, reviewing licensing requirements, or adding compliance safeguards. For those, you’ll want legal counsel to assess what’s missing and how to protect yourself and your practice.
Know When You’ll Need an MSO
If you’re not licensed to practice, you might assume you can simply hire clinicians under your franchise umbrella. However, in some states, unlicensed individuals or entities are prohibited from owning or controlling a healthcare practice. These rules are often referred to as the corporate practice of medicine (CPOM) doctrine. They vary depending on the state and the type of professional involved—for example, a psychiatrist versus a counselor.
See our related video, “The Corporate Practice of Medicine (CPOM) in Illinois”.
This is where a management services organization (MSO) comes in. An MSO lets you manage operations such as billing, marketing, and scheduling without crossing into territory reserved for licensed professionals. It also gives structure to the financial relationship between you and the clinical providers.
Read our related article, “Why the MSO Model Could Benefit Your Mental Health Practice” or see our related video, “MSO Basics”.
Make Sure Forms and Policies Are State-Compliant
One of the benefits of owning a franchise is access to ready-made forms and templates. But these resources often aren’t tailored to the specific laws in your state. That can create compliance gaps. For example:
- Intake Forms – States may mandate different disclosures or have their own standards for obtaining informed consent. Thus, using a generic form could potentially subject you to sanctions and put your practice in jeopardy.
- Privacy Policies – HIPAA is the federal standard, but some states have stricter laws. California, for example, enforces the Confidentiality of Medical Information Act (CMIA), which includes requirements that go beyond HIPAA and have been expanded in recent years. (See our related article, “California Privacy Laws and Your Healthcare Practice”.)
- Employment Agreements – Whether you’re hiring W-2 employees or independent contractors, the terms must reflect the rules in your state around pay, benefits, termination, and more.
A strong legal foundation starts with making sure all policies are drafted—or at least reviewed—with state laws in mind.
Weigh the Long-Term Tradeoffs of Brand Ownership
Brand recognition can help get your practice off the ground. But as your location grows, you may find the franchise’s intellectual property limits your flexibility.
The franchisor typically owns the practice name, logo, and many of the systems you’re using. That means if you decide to expand on your own or part ways with the brand, you might have to start from scratch in terms of marketing, materials, and even patient perception.
It’s worth considering how much autonomy you want at the beginning, and what kind of control you hope to have down the road.
Get Legal Support
Buying a mental health franchise is a major decision. It’s important to have a clear view of the risks, requirements, and long-term implications. Whether you’re navigating the contract terms, forming an MSO, or tailoring your intake documents, an experienced healthcare attorney can help set your practice up for success.
If you’re considering a franchise and operate in a state where we have licensed attorneys, schedule a consultation to talk through your options.
This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.
